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United States Court of Appeals

Tenth Circuit

December 20, 2006

Elisabeth A. Shumaker
Clerk of Court


IN C.,
No. 05-4257
(District of Utah)
(D.C. No. 2:00-CV -468-TS)

K ELLY CLA RK , an individual; THE


Before H E N RY , M U RPH Y, Circuit Judges, and FIG A, District Judge ** .

After examining the briefs and the appellate record, this panel has
determined unanimously to grant the parties request for a decision on the briefs
without oral argument. Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is,
therefore, ordered submitted without oral argument.

This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 (eff. Dec.
1, 2006) and 10th Cir. R. 32.1 (eff. Jan. 1, 2007).

The Honorable Phillip S. Figa, United States District Judge for the
District of Colorado, sitting by designation.

I. Introduction
Phone Directories Company, Inc. (PDC) filed a motion for an order
requiring The Local Pages, Inc. and Kelly Clark, its owner and president,
(collectively The Local Pages) to show cause why they should not be held in
contempt of court for violating a previously entered Stipulated Judgment. The
United States District Court for the District of Utah granted the motion and, after
an evidentiary hearing, entered an order of contempt against The Local Pages.
The district court concluded The Local Pages had violated four provisions of the
Stipulated Judgment. The Local Pages appeals this order of contempt, arguing (1)
the district court lacked jurisdiction to enter the order; (2) there was insufficient
evidence to support the district courts conclusion that The Local Pages violated
the Stipulated Judgment; and (3) the district court erroneously rejected The Local
Pages defense of substantial compliance. This court has jurisdiction pursuant to
28 U.S.C. 1291 and affirms the district courts order of contempt.
II. Background
PD C and The Local Pages are competing publishers of telephone
directories. C lark is the ow ner and president of The Local Pages. The two
companies often compete directly for yellow page advertising contracts in several
areas throughout the United States, including Vernal, Utah.
In a previous lawsuit, PD C filed an amended complaint against The Local
Pages, alleging violations of the Lanham Act under 15 U.S.C. 1125(a) and other

deceptive business practices. The claim was settled pursuant to a Settlement

Agreement entered into by the parties and the entry of a Stipulated Judgment.
Under the Stipulated Judgment, both parties were enjoined from engaging in a
number of deceptive business practices. As relevant to this appeal, the parties
were enjoined from the following:
1. Falsely representing to Customers that they are associated
with, affiliated with, or in any way represent a Competing Entity.
2. Falsely representing or deceptively passing off or referring to
the Competing Entitys telephone directory, or any part thereof, as their
3. Falsely representing to Customers that the Competing Entity
will no longer publish a telephone directory in a Geographical Area.
4. Falsely representing to Customers that the Party is replacing
the Competing Entity as the publisher of telephone directories in a
Geographical Area.
Stipulated Judgment at 4-5.
This dispute arises out of the alleged breach of the Stipulated Judgment by
The Local Pages. For approximately twenty years, PD C had published a
telephone directory in Vernal, Utah, entitled the Basin Phone Directory, without
competition from The Local Pages. The Local Pages, however, decided to
publish a competing directory in the area and began selling yellow page
advertising for its directory. Shortly thereafter, PD C filed a motion for an order
requiring The Local Pages to show cause why they should not be held in contempt
for violating the injunction set forth in the Stipulated Judgment. PD C alleged a
sales agent of The Local Pages had contacted one of PD Cs customers and


claimed she represented Basin Directories, asked to schedule an appointment to

renew the customers advertisement, and stated she was the new Basin
Directories agent. The court granted the motion and held an evidentiary hearing.
At the evidentiary hearing, PD C presented four witnesses to testify
regarding the alleged violations. These witnesses all worked for businesses that
were PDC customers at the time of the acts in question. The witnesses testified
The Local Pages sales representatives stated or implied they represented the
Basin D irectory and began their sales pitch by offering to renew the customers
advertisements. Specifically, there was evidence that one representative, Bonnie
Ball, carried a PDC directory with her to sales meetings, and that another
representative faxed copies of an existing PDC ad to a customer in an effort to
confirm the content of the new ad. One witness testified Ball falsely told her
Basin Phone Directory would no longer service the area.
In response, The Local Pages offered the testimony of Ball, who denied she
had ever made a false statement or intended to deceive PDCs customers. It also
presented evidence of a company policy, which required all employees to read
and agree to comply with the Stipulated Judgment. Ball, however, testified she
had not read the Settlement Agreement or the Stipulated Judgment. In addition,
The Local Pages presented evidence of a Code of Conduct in its sales manual,
which included restrictions on activities not prohibited by the Stipulated
Judgment. It further presented evidence Ball had been warned for violating the

Code of Conduct by bringing a competitors directory to sales meetings w ith

potential customers.
Following the evidentiary hearing, the district court entered an order of
contempt, concluding PD C had proved violations of the Stipulated Judgment by
clear and convincing evidence. It found The Local Pages sales representatives
had engaged in conduct that violated each of the four provisions of the Stipulated
Judgment listed above. Because it concluded PDC had not presented sufficient
evidence of damages, it awarded PDC only costs and attorneys fees in the
amount of $15,763.00. The Local Pages now appeals the order of contempt and
the order awarding PDC its costs and attorneys fees.
III. Analysis
A. Jurisdiction
This court must first address The Local Pages argument that the district
court did not have jurisdiction over the contempt proceedings because PDC failed
to comply with the procedure in the Settlement Agreement before seeking judicial
intervention. Pursuant to the Settlement Agreement, the party alleging breach
must notify the other party in writing and allow ten business days for the other
party to investigate and propose a remedy. The Agreement provides, [i]f the
parties cannot resolve an alleged breach [through these means], they may then
seek court intervention. Because PDC initially filed its motion for order to show


cause without notifying The Local Pages of the alleged breach, The Local Pages
contends the district court did not have jurisdiction to consider the motion.
This court reviews jurisdictional questions de novo. In re Special Grand
Jury 89-2, 450 F.3d 1159, 1170 (10th Cir. 2006). In this case, the court need not
decide whether PDC adequately complied w ith the Settlement Agreement because
the district courts jurisdiction was not contingent on the Agreement or the
parties compliance with its procedures. It is well-established that a court retains
ancillary jurisdiction over subsequent proceedings to enforce its own orders and
judgments. Peacock v. Thom as, 516 U.S. 349, 356 (1996). W ithout jurisdiction
to enforce a judgment entered by a federal court, the judicial power would be
incomplete and entirely inadequate to the purposes for which it was conferred by
the Constitution. Id. Because the contempt order was based solely on violations
of the injunction set forth in the Stipulated Judgment, the district court had
jurisdiction, independent of any provisions in a private agreement. 1

Thus, PDCs

In support of its argument, The Local Pages cites M orris v. City of Hobart,
39 F.3d 1105 (10th Cir. 1994), for the proposition that a district court must
expressly retain jurisdiction to enforce a settlement agreement. M orris is
inapposite, however. The district court in this case did not exercise jurisdiction
over the Settlement Agreement, but instead exercised its inherent power to
enforce the terms of the Stipulated Judgment. As such, the courts jurisdiction
over the contempt proceeding was proper, regardless of any express retention of
jurisdiction to enforce compliance.

alleged failure to comply with the Settlement Agreement could not divest the
court of its inherent jurisdiction to enforce its ow n orders. 2
B. Finding of Contempt
This court reviews a district courts determination of civil contempt for
abuse of discretion. FTC v. Kuykendall, 371 F.3d 745, 756 (10th Cir. 2004). A
district court has abused its discretion when its adjudication of the contempt
proceedings is based upon an error of law or a clearly erroneous finding of fact.
Id. The district courts factual findings are clearly erroneous only if they are
without factual support in the record or if the appellate court, after review ing all
the evidence, is left with a definite and firm conviction that a mistake has been
made. M anning v. United States, 146 F.3d 808, 812 (10th Cir. 1998).
To prevail in the district court, a plaintiff must prove, by clear and
convincing evidence: (1) a valid court order existed; (2) the defendant had
knowledge of the order; and (3) the defendant disobeyed the order. Reliance Ins.
Co. v. M ast Constr. Co., 159 F.3d 1311, 1315 (10th Cir. 1998). The Local Pages
does not dispute the validity of the Stipulated Judgment or its knowledge of the

Significantly, the Stipulated Judgment did not incorporate the procedural

provisions of the Settlement Agreement. Thus, if The Local Pages has a claim
against PDC at all, it is one for breach of contract, which it has not properly
raised on appeal. See Consumers Gas & Oil, Inc. v. Farmland Indus., Inc., 84
F.3d 367, 370 (10th Cir. 1996) (Standing alone, a settlement agreement is
nothing more than a contract . . . .).

order. Therefore, the contempt order is proper if there is clear and convincing
evidence the Stipulated Judgment was violated.
The district court did not abuse its discretion in finding clear and
convincing evidence The Local Pages violated the Stipulated Judgment. 3 Three
witnesses, all customers of PDC, testified at the contempt hearing that employees
of The Local Pages had represented themselves as affiliated with PD C when
making sales calls. Lisa Preece stated a Local Pages employee told her he was
with the Basin Directory and asked her to renew her yellow pages listing. Joelle
M artinsen testified Ball entered her store carrying a PDC directory and
confirmed, in response to M artinsens question, that it w as time for renewal.
Brad Hafen explained he also was asked to renew his subscription and was faxed
a copy of his PD C ad by The Local Pages caller. In addition to providing
evidence of false representations of affiliation, the testimony of these witnesses
supports the district courts finding that em ployees of The Local Pages falsely
passed off the PDC directory as their ow n. It was reasonable for the district court
to find that by asking for renewals rather than new subscriptions, The Local Pages
employees implied they worked for the PDC directory, in w hich the customers
already had placed advertisements. In addition, Brandy Johnsons testimony is

As owner and president of The Local Pages, Clark had the obligation to
prevent the corporations violation of the Stipulated Judgment. See FTC v.
Kuykendall, 371 F.3d 745, 759 (10th Cir. 2004). Thus, the district courts
determination that employees of The Local Pages violated the Stipulated
Judgment is sufficient to support an order of contempt against Clark as w ell.

direct evidence of false representations that PD C would no longer publish a

directory in the region and The Local Pages would be replacing it. In her
testimony, Johnson stated Ball explicitly told her the Basin Phone D irectory
would no longer be serving the Uintah Basin and The Local Pages would now
serve the region.
In challenging the sufficiency of the evidence, The Local Pages attempts to
discount the witnesses testimony by noting contradictions between their
testimony at trial and at deposition. It is well-settled that determinations of
witness credibility are for the district court, and this court will therefore not
reexamine the credibility of a witness testimony on appeal. United States v.
Silvers, 84 F.3d 1317, 1328 (10th Cir. 1996). Recognizing this principle, The
Local Pages attempts to characterize its claim as a challenge to the strength of the
evidence, not its credibility. This distinction is unconvincing, however, as
challenges to the witnesses faulty assumptions, confusion, and contradictions go
directly to credibility. Because the district court chose to believe the witnesses
testimony and explanations for the alleged contradictions, this court will not
disrupt the district courts finding. Likew ise, The Local Pages reliance on Balls
testimony to controvert PDCs witnesses is misplaced, because the district court
explicitly found Ball was not believable.
The Local Pages also argues the hearing testimony, even if accepted as
true, does not provide sufficient evidence the Stipulated Judgment w as violated.

It first points out that no provision of the Stipulated Judgment prohibits Local
Pages employees from taking a competitors directory into a sales meeting or
sending a copy of the customers ad in a competing directory. This argument
misses the point. W hile these acts are not alone violations of the Stipulated
Judgment, they are evidence of an intent to pass off PDCs directory as their own.
The Local Pages also argues its employees statement that he was w ith the Basin
Directory was not a false statement because Basin Directory is a generic name
which can describe any directory in the region, including that of The Local
Pages. 4 The district court, however, determined false representations of
affiliations w ere made. Given The Local Pages awareness of the Basin
Directory, this finding was not clearly erroneous. Finally, this court rejects the
argument that representations to employees without purchasing power do not
amount to representations to customers. Because these employees interacted with
The Local Pages salespeople regarding the purchase of yellow pages ads, it was
not clearly erroneous for the district court to determine false representations to
these employees constituted false representations to customers.

In its brief, The Local Pages challenges the validity of PDCs right to
Basin Directory as a protectable trademark. Appellant Br. at 17-18. This issue
was not argued before the district court and this court will not consider it on
appeal. See Chavez v. City of Albuquerque, 402 F.3d 1039, 1047 (10th Cir. 2005)
(Absent extraordinary circumstances not present here, we do not address
arguments raised for the first time on appeal. (citation omitted)). In any event,
The Local Pages agreed in the Settlement Agreement and Stipulated Judgment not
to falsely represent its affiliation with PDC, so the trademarks legal protection is

The Local Pages makes two additional challenges to the district courts
findings, which this court also rejects. First, The Local Pages contention that the
district court based its finding of contempt solely on its disbelief of Balls
testimony is belied by the courts oral ruling. In its ruling, the court explained its
findings were based on the testimony of PDCs witnesses. It only noted its
disbelief of Ball to acknowledge, and discount, the competing evidence. This
court also concludes the district courts findings were sufficient under Rule 52(a)
to allow for meaningful appellate review. The courts oral ruling indicated which
testimony supported its findings as to each violation. Based on this reference,
this court was able to examine the witnesses testimony to determine whether
those findings were clearly erroneous.
Thus, the evidence presented at the hearing adequately supported the
district courts determination that PD C proved, by clear and convincing evidence,
The Local Pages violated the Stipulated Judgment. This court therefore concludes
the district court did not abuse its discretion in holding The Local Pages in
contem pt. 5

To the extent The Local Pages argues the district court applied the wrong
legal standard, this argument directly contradicts the courts written conclusions
of law, in which it twice states PD C proved a violation of the injunction by clear
and convincing evidence. The district court first states, PDC met its burden of
proving by clear and convincing evidence . . . that defendants disobeyed the
order. It continues, Specifically, PD C proved by clear and convincing evidence
that defendants violated Subparagraphs 1,2,3, and 4 of the injunction . . . .
Based on these statements and the sufficiency of the evidence discussed above,

C. Substantial Compliance
W hile some courts have recognized substantial compliance as a defense in a
contempt proceeding, this court has not previously recognized the defense in a
published opinion. 6 In those courts that have recognized the defense, a defendant
who has violated a court order may avoid liability for contempt by showing by
clear and convincing evidence that all reasonable steps w ere taken in good faith
to ensure compliance with the court order and that there was substantial
compliance. Bauchman v. W. High Sch., 906 F. Supp. 1483, 1494 (D. Utah
1995). The Local Pages argues it took such reasonable steps by (1) ensuring all
sales representatives received and reviewed a copy of the Stipulated Judgment
and (2) establishing and enforcing a Code of Conduct for employees that went
beyond the standards set forth in the Stipulated Judgment.
This court need not decide whether to recognize substantial compliance as a
defense in this circuit. Assuming the defense exists, The Local Pages has failed
to prove it should apply in this case. The district court concluded that although

this court concludes the district court fully understood the evidentiary standard it
was required to apply.

This court has recognized a defense when a defendant shows by clear and
convincing evidence that he was plainly and unmistakably unable to comply
with the court order. Donovan v. Burgett Greenhouses, Inc., 759 F.2d 1483, 1486
(10th Cir. 1985). Although this defense is related to the substantial compliance
defense argued by The Local Pages, it is a separate defense, focusing on the
impossibility of compliance rather than the level of compliance achieved. The
Local Pages does not argue it w as unable to comply with the Stipulated Judgment.

some steps were taken to ensure compliance w ith the Stipulated Judgment, these
steps were insufficient to constitute a defense. Specifically, the court noted
Balls testimony that she was never presented the Settlement Agreement or the
Stipulated Judgment for her review. 7 Because the question of whether The Local
Pages substantially complied with the court order is part of the determination of
contempt, this court reviews the district courts conclusion for abuse of
discretion. See Hallett v. M organ, 296 F.3d 732, 750 (9th Cir. 2002).
Given Balls testimony and The Local Pages failure to further investigate
Balls behavior after the alleged misconduct, the district courts conclusion as to
the steps taken by The Local Pages w as not an abuse of discretion. Contrary to
The Local Pages assertions, the district court did not abuse its discretion in
concluding the existence of a policy did not alone constitute all reasonable steps
to ensure compliance. This is especially true in light of evidence the policy was
insufficient to ensure employees actually read the Stipulated Judgment. Further,
the numerous violations of the Stipulated Judgment discussed above undermine
The Local Pages contention that it in fact substantially complied with the court

The Local Pages argues this finding conflicts with testimony by Clark that
all employees were provided copies of the Stipulated Judgment and Settlement
Agreement. The district courts findings indicate, however, it found a difference
between the company policy, as testified to by Clark, and the application of that
policy in this instance. Further, Balls written certification that she received the
Stipulated Judgment and Settlement Agreement does not make this finding clearly
erroneous because her hearing testimony directly contradicts this certification.

order. Thus, the district court did not abuse its discretion in denying The Local
Pages substantial compliance defense. 8
IV. Conclusion
For the foregoing reasons, this court affirm s the district courts order of
contempt against The Local Pages and the order requiring The Local Pages to pay
PDCs costs and attorneys fees.

M ichael R. M urphy
Circuit Judge

The Local Pages reliance on Bauchman v. West High School, 906 F. Supp.
1483 (D. Utah 1995), is misplaced. In that case, the court found school
authorities had substantially complied with a court order enjoining the singing of
two religious songs at high school graduation, even though students and audience
members defied the authorities and sang the songs nevertheless. The Local Pages
attempts to liken this case to Bauchman by arguing the violation by Ball was
similarly out of its control. This case is distinguishable, however, because the
violations were not committed by unrelated third parties, as in Bauchman, but by
The Local Pages own employee.